Katherine Zappone (Independent) | Oireachtas source

I welcome the Minister of State. I welcome several progressive measures in the budget. The Minister of State has identified them, including the extension of PRSI to non-earned income, changes related to capital acquisitions tax and capital gains tax and the clampdown on sick pay in public service, to which the Minister for Finance, Deputy Noonan, referred as well. I welcome the reforms related to political expenses. For some time my Independent colleagues and I have called for the abolition of the system of unvouched expenses, especially as it relates to the party leader's allowance.

However, the signalled change to tax relief on pension contributions is not a brave move; it is a missed opportunity. It will not produce the more significant savings that would accrue from standardising the rate of tax relief, amounting to ¤700 million. Most important, it will not take effect until 2014 and therefore there will be no savings in 2013. There are no progressive measures on pensions for 2013.

One key aspect of the Government's taxation policy calls into question the reference to the budget overall as fair and progressive inasmuch as such measures are contained in the budget. I am referring to the Government commitment to maintain the corporate tax rate. There is a significant difference between the nominal rate of corporation tax of 12.5% and the effective rate of tax that multinational corporations operating in Ireland actually pay. Due to a variety of tax breaks available to multinational companies, some sources put the effective tax rate for many of them as low as 5% or 6%. These breaks are essentially a form of public spending. The choice to have a low effective corporation tax rate represents a decision to provide subsidies to corporations. I realise my remarks are significantly at odds with the earlier comments of the Minister for Finance, Deputy Noonan. While the 12.5% rate may have been of extraordinary benefit to the Irish economy in the past - I acknowledge as much - its effect is waning.